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Is India Turning 'Paper'? Goldman Sachs Gold ETF in India Sees 11 Fold Surge in Volume

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From GoldCore

Goldman Sachs Gold ETF in India Sees 11 Fold Surge in Volume

Gold’s London AM fix this morning was USD 1,641.25, EUR 1,241.49, and GBP 1,019.54 per ounce. Yesterday's AM fix was USD 1,638.75, EUR 1,244.68and GBP 1,014.83 per ounce.

Silver is trading at $30.94/oz, €23.41/oz and £19.21/oz. Platinum is trading at $1,551.00/oz, palladium at $669.30/oz and rhodium at $1,350/oz.

Gold rose $3.00 or 0.18% in New York yesterday and closed at $1,641.20/oz. Gold traded sideways in Asia and then ticked higher in European trading prior to seeing some weakness.


Cross Currency Table – (Bloomberg)

Gold has been in an incredibly tight range - hovering around the $1,640/oz level this morning as markets await the US Federal Reserve’s decision regarding maintaining ultra loose monetary policy and further quantitative easing (QE3). 

The Fed is due to release a statement outlining its views on policy and the economy at about 1630 GMT, followed by a news conference by Fed Chairman Ben Bernanke.

The Fed is expected to reiterate its stance to keep U.S. interest rates near zero over the next two years, which will continue to make gold an attractive inflation hedging asset.  

Bullion struck its 2012 high around $1,790/oz in late February after the Fed said it would keep interest rates near zero until at least the end of 2014. 

Gold’s most recent sell off was precipitated on February 29th after heavy selling was seen when Bernanke suggesting that there would be no more QE.

The renewed almost exclusive focus on gold in US dollar terms in recent weeks is obscuring the fact that gold appears to have corrected and consolidated in other major currencies since August 2011.

The multi currency gold chart below shows how gold appears to be very well supported at $1,545/oz, €1,200/oz and at £1,000/oz.


Gold 1 Year in USD-White, EUR-Orange) and GBP-Yellow  - (Bloomberg)

This chart is not indicative of a bubble bursting in a liquid trade-able asset. Such bubbles are characterised by sharp parabolic moves up in price followed by equally if not faster price collapses.

Non US investors and buyers of gold should continue to focus on gold in local currency terms.

Indian Festival Demand Not Spectacular But Robust 
From the world’s largest gold importer, India, there are mixed reports regarding spending on gold at this year's Hindu and Jain holy festival of Akshaya Tritiya.

India’s majority Hindus are celebrating Akshaya Tritiya today, the second-biggest gold buying day. During Akshaya, a Sanskrit word meaning “that which never diminishes,” Indians begin a new venture or buy valuables with the belief it will bring luck and prosperity. Based on the lunar calendar, the date changes every year.

Akshaya Tritiya is the second-biggest gold-buying festival after Dhanteras in India, where the level of demand can have an effect on global prices.

Some Indian media report that there has been robust and 'sustained' demand from investors and retailers (see below). However, other media reports say that demand has been somewhat less when compared to the usual splurge, as families struggle with rising expenses and high prices for the revered spiritual metal. 

Gold bullion buying was robust elsewhere in Asia with demand reported in Indonesia and Thailand.

Goldman Sachs Gold ETF in India Sees 11 Fold Surge in Volume 

Trading in Goldman Sachs Group Inc.’s gold ETF in India surged almost 11 fold, leading an advance in gold securities, as investors bought gold to mark the auspicious Hindu festival of Akshaya Tritiya.

Volumes in GS Gold BeEs, India’s biggest exchange-traded fund backed by gold, was 937,816 units on the National Stock Exchange of India Ltd. at 4:54 p.m. in Mumbai, up from 85,376 units yesterday and more than the 101,914 average daily volumes in the last six months through yesterday, according to data compiled by Bloomberg. 

This is significant volume. Each unit represents about 1 gram of physical gold and therefore 937,816 units is the equivalent of some 29,170 ounces of gold which at today’s prices is some $47 million of daily volume for just one gold ETF in India.

The Goldman Sachs India gold ETF is just one of many new ETFs in India.

Trading in Kotak Gold ETF jumped more than eightfold to 226,032 units. 

Gold demand in India, the world’s biggest importer, may climb as much as 25% to 15 metric tons on Akshaya this year, according to Rajesh Exports Ltd., the country’s biggest gold-jewelry exporter.

Assets held by local gold funds reached a record 98.9 billion rupees ($1.87 billion) at the end of March, according to the Association of Mutual Funds in India. GS Gold BeEs had assets worth 29.6 billion rupees (some $563 million (USD)) as of March 31, data from the association showed.

Trading in UTI-Gold Exchange Traded Fund climbed more than fivefold, while volumes in Reliance Gold ETF, the second-biggest fund, was up more than sixfold, data shows.

There is the possibility that some of India’s traditional demand for jewellery and bullion may be being channelled into these new financial instruments.

However, India’s cultural affinity with physical gold will continue and the brides of India will always prefer jewellery and physical in hand to the ETFs of Goldman Sachs or other product providers. 

Argentina Increases Gold Reserves by 13% - From 54.74 to 61.74 Tonnes

Argentina increased its gold reserves by 13% in September 2011. Latin America's third largest economy added some 7 tonnes of gold to its holdings, bringing its reserves to 61.74 tonnes in September last year.

Argentina added to its gold reserves as the price began to retreat from record highs.

Argentinian government officials have confirmed the IMF data reporting the country's first such purchase in six years - it was the first addition by Buenos Aires to its gold reserves since February 2005, according to the IMF's monthly international finance statistics report.

Argentina has a bitter experience of currency devaluation and has learned the hard way the value of gold as a safe haven currency.

Argentina's economic growth slowed to its lowest level in more than two years in February and inflation is very high at 10%.

Credit ratings agency Standard & Poor's on Monday cut its assessment of the outlook for Argentina's foreign debt to negative, citing policies that include a government push to seize control of energy company YPF from Spain's Repsol.

Resource and economic nationalism is clearly on the rise and the risk of trade, economic and currency wars and geopolitical risk in general are risks that markets remain highly complacent about.   

OTHER  NEWS
(PTI) -- Gold surges on 'Akshaya Tritiya', silver gains 
Gold prices soared at the bullion market on the sustained demand from investors and retailers amidst festive spirit of 'Akshaya Tritiya' where buying precious metals, especially gold, is considered auspicious.

Silver also recovered modestly on back of stray buying support from speculators.

Standard gold (99.5 purity) spurted by Rs 250 to finish at Rs 28,885 per 10 gm from Monday's close of Rs 28,635.

Pure gold (99.9 purity) also climbed by Rs 255 to end at Rs 29,025 per 10 gm from Rs 28,770.

Silver ready (.999 fineness) moved up by Rs 60 per kg to close at Rs 56,750 as compared to Rs 56,690 previously. Meanwhile, in New York gold fell on concerns over Eurozone political developments and lower manufacturing data from China. Gold for June delivery dropped USD 10.20 to USD 1,632.60 an ounce on the Comex division of the NYMEX late yesterday.

(Bloomberg) -- Gold Futures in Shanghai Advance for First Time in Three Days
Gold for December delivery climbed for the first time in three days on the Shanghai Futures Exchange, gaining as much as 0.5 percent to 336.55 yuan a gram. It traded at 336.44 yuan at 9 a.m. Singapore time, rebounding from its drop to a two-week low yesterday. On the Shanghai Gold Exchange, bullion of 99.99 percent purity, the benchmark cash contract, was little changed at 334 yuan a gram.

NEWS
Gold perched at $1641 on equities, all eyes on Fed - Reuters

Gold May Extend Climb Alongside Equities on U.S. Data, Earnings - Bloomberg

'Real' trading in U.S. markets is down to 16 percent; Rest is machines – Financial Times

Central Banks Beef Up Gold Reserves In March – Equities.com

Soros Compares Euro-Zone Crisis to Soviet Collapse – Wall Street Journal

COMMENTARY
Euro Will Go Way Of Most Monetary Unions; It Will Break Up – David McWilliams

Faber: Imminent Market Crash, a Recession in China, Says Fiscal Condition of US a "Catastrophe" – Mish’s Global Economic Trend Analysis

Bryan - Asia To Deploy Stunning & Massive QE – King World News

ESM Will Supply Whatever Money Is Needed In Euroland – Jim Sinclair’s MineSet

Steve Keen On Europe's Delusion And Why The Entire World Is Turning Japanese – Zero Hedge

The Gold Megathrust – Resource Investor

Is Gold Still Cheap? – 24HGold

 

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Wed, 04/25/2012 - 07:50 | 2372808 j0nx
j0nx's picture

A fool and his money. If it aint phys then you aint got shit. Only two words I need to see to stay FAR away from that purchase: Goldman and paper.

Wed, 04/25/2012 - 07:55 | 2372820 Ruffcut
Ruffcut's picture

Goldman ponzi corp. The are like locusts, attacking anyone and anything with currency.

Wed, 04/25/2012 - 08:09 | 2372830 GetZeeGold
GetZeeGold's picture

 

 

Isn't it enough to sell the Muppet Indians whiskey and plastic beads.....now we're selling them paper gold?

 

Wed, 04/25/2012 - 08:15 | 2372841 LongSoupLine
LongSoupLine's picture

wrong "indians"...but you know that, which makes it funny. +1.

Wed, 04/25/2012 - 08:18 | 2372845 Colombian Gringo
Colombian Gringo's picture

+1000

Wed, 04/25/2012 - 08:56 | 2372926 Paul Atreides
Paul Atreides's picture

Somebody call tech support and warn them!!!

Wed, 04/25/2012 - 09:12 | 2372983 Oh regional Indian
Oh regional Indian's picture

Tis tragic but true.

India is being papered over. No clink clink, just rustle rustle.

And your man in India ZH, ask him to also check on the gold loan story before he leaves. That will balance yesterday's Gold Love story. Feel free to have him/her get in touch. If they're doing the two-wrist thing, they are not seeing India, at all.

ori

OutSourcing....

Wed, 04/25/2012 - 09:13 | 2372992 machineh
machineh's picture

"Isn't it enough to sell the Muppet Indians whiskey and plastic beads.....now we're selling them paper gold?"

Hey, as usual the muppets have been given a back-handed warning: GS Gold BeEs -- pronounced "G.S. Gold B.S."

See, it helps if your lips move when you read! Muppet skool, biTcheZ!

Wed, 04/25/2012 - 08:42 | 2372899 fightthepower
fightthepower's picture

I guess they will have to learn the hard way.

Wed, 04/25/2012 - 08:50 | 2372908 IBelieveInMagic
IBelieveInMagic's picture

Fresh bunch of suckers who don't want to do the heavy lifting of securing physical assets. Are deluded into thinking someone is going to hold real assets for them. Suckers!

Wed, 04/25/2012 - 08:55 | 2372921 Levadiakos
Levadiakos's picture

Talk about a nation of sheeple

Wed, 04/25/2012 - 07:53 | 2372811 francis_sawyer
francis_sawyer's picture

The squid... Creating 'Slumdog Millionaires' one country at a time...

Wed, 04/25/2012 - 07:57 | 2372823 bigdumbnugly
bigdumbnugly's picture

"are indians that stupid to buy paper gold?"

not the smart indian dude that bedecked that babe in all that bling on the cover of the newspaper here.

somehow i don't think giving her a bit of paper to wear around her neck would induce her to drop the sari quite so willingly.

Wed, 04/25/2012 - 08:11 | 2372835 Börjesson
Börjesson's picture

You horrible bigot you! The babe undoubtedly bought the bling for herself, with the salary she makes as a computer expert or biochemical engineer.

Wed, 04/25/2012 - 12:26 | 2372843 bigdumbnugly
bigdumbnugly's picture

yeah probably.

Wed, 04/25/2012 - 07:56 | 2372822 mspgrandi
mspgrandi's picture

Gold and Silver....  am surprised ZH still covers them with Bullish comments

Wed, 04/25/2012 - 08:10 | 2372833 GetZeeGold
GetZeeGold's picture

 

 

You must watch CNBC.

 

Wed, 04/25/2012 - 08:17 | 2372844 LongSoupLine
LongSoupLine's picture

You must watch CNBC.

 

You must be an intern troll for CNBC...(fixed it).

Wed, 04/25/2012 - 09:15 | 2372997 machineh
machineh's picture

Their interns can READ??!!

Wed, 04/25/2012 - 09:03 | 2372957 trembo slice
trembo slice's picture

that's because you're a fool

Wed, 04/25/2012 - 11:57 | 2373641 bernorange
bernorange's picture

How can they be in a bubble with sentiment like that?

Wed, 04/25/2012 - 07:58 | 2372824 JohnKozac
JohnKozac's picture

I read the inflation rate in Argentina is now 25% according to The Daily Reckoning author who lives there in the pampa.

Wed, 04/25/2012 - 08:23 | 2372854 youngman
youngman's picture

and did you see the Argentina central bank bough gold this last quarter....lol

Wed, 04/25/2012 - 08:01 | 2372828 fonzannoon
fonzannoon's picture

So is the evil financial world now swindling the most notable physical buying country into owning paper? I wonder how often the Indian Bob Pisani will be auditing their vault.

Wed, 04/25/2012 - 08:11 | 2372834 Robslob
Robslob's picture

The difference in India is they probably already have all the physical they could ever need...but in the U.S.  uh, not so much.

Wed, 04/25/2012 - 08:24 | 2372857 youngman
youngman's picture

I just don´t think the paper gold is going to work for the Dowery....just sayin.....no Krugie..no nookie

Wed, 04/25/2012 - 08:43 | 2372875 Zero Debt
Zero Debt's picture

The Indian Gold ETF:s (paper gold) are given advantages over physical gold which siphons off demand from the physical market:

http://www.business-standard.com/india/news/markets-gearfor-akshaya-trit...

 

Wed, 04/25/2012 - 08:40 | 2372893 EmileLargo
EmileLargo's picture

The gold ETF is useless for most Indians who use gold as a means of hiding "black money" (money on which no taxes have been paid). The ETF is for working schmucks who have no idea what the government will do in the event of a currency crisis.

The smart cookies in India have been hoarding physical for decades. One friend told me about how the Indian equivalent of the IRS once raided a businessman's house and uncovered an entire floor under the bathroom tiles filled with gold "biscuits". This may sound like an apocryphal story to us but they are par for the course in India and China.

The sale of "investment" bars in India has also gone through the roof. That is the bit you won't hear about because the buyers are not buying jewellery but bars explicitly as investments and the MSM doesn't want you to know.

Wed, 04/25/2012 - 09:16 | 2373001 Oh regional Indian
Oh regional Indian's picture

Sounds totally possible. I'll bet India alone (the public that is) can take the three OLYMPIC sized swimming pool theory and put it in the dust bin of urban legend.

The bigger story is how Silver invest demand has risen from near 0 to 6 on a scale of 1 to 10. And this in the past year a half, max. Like crazy last year.

ori

Wed, 04/25/2012 - 09:37 | 2373066 EmileLargo
EmileLargo's picture

Where do Indians hoard their silver? Silver is a lot harder to hoard than gold.

Wed, 04/25/2012 - 09:54 | 2373155 Oh regional Indian
Oh regional Indian's picture

Emile, even th efact that they are buying Investment Bars is a huge change. Of course, silver has an equal history both as money and jewellery in India.

In fact, the Indian Rupee has been a huge part of Silver Manipulation this last year. If someone charted INR/USD along with SIlver price, I think very interesting correlations will leap out, especially and probably tick-for-tick since May or so last year.

Anyone with requisite chartiing skills?

ori

Wed, 04/25/2012 - 08:52 | 2372912 Rubicon
Rubicon's picture

Tis a GS lie.

Wed, 04/25/2012 - 09:12 | 2372982 Bazinga
Bazinga's picture

Blankfein was just on Indian television pronouncing that by offering this ETF, GS is doing Vishnu's work.

Wed, 04/25/2012 - 09:14 | 2372994 Quinvarius
Quinvarius's picture

As long as the Indian gold ETFs actually have gold, I have no problem with them.  Honest gold ETFs are the seeds of our future paper currency system.  I am looking fotrward to their nationalizations by various mints and defacto use as units of exchange.

Wed, 04/25/2012 - 09:29 | 2373039 Ek Onkar
Ek Onkar's picture

I live in India and I know for a fact that people here are blinded by the foreign bug or what "developed countries" are doing.. So if you tell them that etfs are a rage in US, Europe, etc. they'll just pounce on it.. Nevertheless, it serves them well, as only the well-to-do or so-called educated classes with their trunks of black money have access to such financial instruments.. The poor guy in the villages where 65% of India resides still depends on gold as a store of his hard-earned wealth.. So, in a way when the paper market collapses, the transfer of wealth will accompany the downfall of black economy.

Wed, 04/25/2012 - 09:35 | 2373057 EmileLargo
EmileLargo's picture

How does a guy with black money buy an ETF? Isn't that going to reveal the assets he has to the tax authorities?

Wed, 04/25/2012 - 10:27 | 2373281 Ek Onkar
Ek Onkar's picture

ya, u r right.. a guy with black money would rather buy physical gold.. hmmm. Anyways, my point being the black economy collapses. Buying physical gold will transform it into white, when the fiat paper goes kaput.. 

Wed, 04/25/2012 - 09:41 | 2373095 Reptil
Reptil's picture

Yes, EFT have been proven to be succesful manipulation vehicles.

Wed, 04/25/2012 - 09:36 | 2373065 israhole
israhole's picture

Paper gold from Golden Sacks?  No thanks.

Wed, 04/25/2012 - 09:39 | 2373082 Reptil
Reptil's picture

aaahh... let's welcome India to the NWO fold. irradiated, genetically manipulated and stuffed with paper. and a nuke arms race to boot. civilised, just like us.

https://www.youtube.com/watch?v=sAUHZiyO-nY

and to jog the memory: https://www.youtube.com/watch?v=hgQC4O5p_iA

Wed, 04/25/2012 - 09:56 | 2373162 sandeepyadav
sandeepyadav's picture

I am just wondering was so much Paper trading done on the India market ????

smart Indians always believed in the physical Gold, I still believe the figure reposrted by the financial media are bit speculated . 

Thanks http://sandyyadav.com

 

Wed, 04/25/2012 - 10:03 | 2373199 Bansters-in-my-...
Bansters-in-my- feces's picture

Hey...!

Thats a nice looking necklace,what is it made of ?

Is that that new ETF paper gold Jewelry ?

And tha scam goes on.

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